Online Selling

Essential Tips to Effectively Price Your Products Online

Pricing happens to be one of the most important factor of marketing. No pricing technique is absolutely foolproof but is absolutely necessary for any business. Overpricing leads to a drop in the number of buyers and under-pricing leads to a slowdown in the business turnover due to lower profit margins, profit is another important point of any business. Optimum or effective pricing is a skill that most businesses need expertise in. Many online pricing norms and guidelines are available today but personal experimentation is the best teacher of all times. Depending upon the type of business, the seasonal/ off-seasonal demand for your products, the risks involved in manufacturing, procuring, storing, and handling, and many other factors pricing of the products will have to be evaluated and determined before coming to the best price that you can offer to your customers.

What are the Different Ways to Effectively Price Products?

  • Determining the Unit Retail Selling Price
  • Competitive Pricing
  • Psychological Pricing
  • Price Skimming
  • Anchor Pricing
  • Loss-Leading Pricing
  • Discount Pricing
  • Product Bundling Pricing

Determining the Unit Retail Selling Price

Depending on whether you have a new online business venture or you are an experienced player, the unit retail selling price of your product should be determined.
Many experienced sellers calculate a markup value (usually 50% above the total cost) for their products below which they would not sell their products to their buyers.

In case of selling on marketplaces like eBay, TrueGether or Amazon, the sellers add the additional overheads of the service provider’s sales commission, shipping, taxes e.t.c to come to a final selling price number. This method is called keystone pricing and is used as a thumb rule by most e-retailers. This method provides substantial profit margins but cannot guarantee competitive pricing in a volatile market. For the newbies, the situation might be a little different where cost-based pricing is the best method to breakeven at a minimal percentage without excessive loss. An optimum price adjustment between the expenses and gains could help in the safe pricing of products that do not earn you much margin.

Competitive Pricing

There may be adversaries on the same platform or from different online shopping sources that sell the same products that you offer at lower or higher prices than yours. Many factors may be advantageous to your competing sellers which would lead to better pricing and a high buying rate by customers from them. Some of these factors are, suppliers’ offer price, suppliers’ location, seller’s geographical location, local demand for their product(s), seller’s e-marketplace ranking, seller’s trust factor, local market factors, selling strategy, offers, etc. Offering a below competition pricing may lead to writing off of valuable profit margins while sometimes raising suspicion in the minds of customers about the product’s worth, but it can lead to a special pricing phenomenon that would lure buyers to your store. Cutting unfruitful costs is the best idea to ensure that too much is not being invested in the product before it is being sold. A prestige-oriented seller would mostly sell above competitors’ price as a validation of their products’ high quality, reliability, and worth.

Conventional Pricing Mechanisms

Psychological Pricing

This method is often used by sellers to remove the decimal places in the price and set a whole number pricing for their products. The way buyers perceive the price becomes the trump card for merchants to play their pricing technique. Another method is to set the higher whole number to a lower decimal number pricing, for example putting $9.99 instead of $10 which works for many customers who take numbers and savings seriously. Entering the customers’ psyche and triggering a buying impulse is the name of the game. Usually, number 9 has an attracting impulse on the human minds which has often been capitalized by sellers online.

Price Skimming

This is the method where the seller introduces the product at the highest possible price and slowly reduces the price over time calling it a sale or discounted price. The status-oriented customers buy at the former price, while the price-conscious customers wait until the price drops and then venture on to buy the product.

Anchor Pricing

Most online sellers use this method where the original price is displayed which is stricken off and the discount price is flashed on the screen with the percentage of discount also being flashed for the product. The amount of savings is also displayed to let the customer know that they are benefiting from this purchase. The original price is the anchor that is used as a reference by customers. The seller can also place lower priced items next to highly-priced items to grab the attention of customers on the lower priced product.

Loss-Leading Pricing

The sellers sell some of their products at a loss (lesser price than competitors) in order to attract customers and then display other complementing items of interest to lure the customers while they are at buying the highlighted product.

Discount Pricing

This is a conventional method which is followed by most online sellers or flash sales at e-marketplaces to attract more purchase volume through coupons, rebates, discounts, seasonal pricing, off-season discounts, stock clearance sales etc. This is the best way to offload excessive unsold stock and attract more buyers who are price conscious.

Product Bundling Pricing

Some sellers offer more than buyers can bargain for and manage to attract more traffic. When the sellers offer two items for the price of one or give a buy-one-get-one-free by marginally reducing the original price of both the items, it is called bundling. The sellers either club less profitable items for free or sell items that are stocked-up for a minor loss.


To sum up, the mechanisms mentioned above can substantially help sellers in pricing their products. The best method to price online products based on their grade and acquiring expenses is through Price Moulding for Potential Customers. Understanding your lucrative buyers and relaying your products to them should be done before pricing the products. Depending upon the policies of marketplaces for sellers, uncertainty in pricing must be determined and a trial and error scheme should be implemented to avoid excessive loss either through inappropriate pricing, wrong customer approach, or driving away buyers because of unrealistic pricing.

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